Investors’ New Found Love of Europe Dominates SuperReturn

(Bloomberg) — As investor unease lingers over the prospects for global dealmaking, money managers’ renewed interest in Europe has become a dominant theme at this year’s SuperReturn private capital conference.

“Whether it’s a pull domestically or a push from the current administration, there is a revitalized enthusiasm about investing in Europe,” Apollo Global Management’s President Jim Zelter said on Bloomberg TV. “The amount of US investors that are looking to invest in Europe is very real and palpable.”

Thousands of industry players, including fund managers, limited partners, lawyers and advisers, flock to the event in Berlin each year to discuss the key themes in private markets. This year, attendees from behemoths including Apollo, BC Partners and Permira are trumpeting European investment opportunities as the region gains traction as an area of relative economic stability in comparison with the US.

In a sign of the continent’s appeal, on Wednesday morning US asset manager Franklin Templeton announced it had bought a majority stake in European private credit firm Apera Asset Management, deepening its push into alternatives.

 

Nikos Stathopoulos, chairman of Europe at BC Partners, said that the market had long undervalued the region’s assets versus their US counterparts. “This disconnect between valuations, between European and US companies, was not really justified. People are seeing it now.”

That take appears widespread at the event in Berlin, as investors begin to question long-held assumptions about regional growth and value.

Permira’s co-head of credit, David Hirschmann, noted that while there had been an established view that the US was more attractive than Europe, mainly driven by its GDP growth, “that sentiment has changed and this is mainly the result of the global trade war.” 

Slow Dealmaking

The private capital industry had been hoping for an M&A boom this year as global dealmaking has been depressed since interest rates started to rise in 2022. This hasn’t yet materialized as the ongoing uncertainty over tariffs stymies confidence among fund managers.

“We are in the midst of tariff diplomacy,” Blackstone’s vice-chairman Thomas Nides said. “And tariff diplomacy is difficult.”

That lack of clarity is weighing on decision-making, with deal flow still stuck in the slow lane.

Joana Rocha Scaff, head of European private equity at Neuberger Berman, said she had seen activity decelerate. Investors are coming to terms with the fact they may be going into “the fourth year of muted exit activity in their portfolios.”

Investors are waiting for pockets of stability to work on transactions, according to Brookfield Asset Management’s President Connor Teskey. Given the amount of pent-up demand, activity is likely to pick up quickly when those moments arrive, he said.

Question of Confidence

Teskey also sounded a note of caution on the bull case for Europe. While the region is getting a lot of focus right now, “the US is still the largest and deepest market around the world,” he said.

But even for firms focused on domestic opportunities, global dynamics are hard to ignore.

Blair Jacobson, co-president of Ares Management Corp., said that while they typically focus on local businesses that are largely shielded from international trade, Ares is monitoring the knock-on impacts of tariffs. 

“All the dislocation in the markets would make a CEO hesitate around new business decisions, growth decisions, so we are very focused on CEO confidence,” he said. “It also goes into consumer confidence.” 

Caution, however, is not the only way private market mavens are responding to tariffs.

Stephen Wise, Carlyle’s co-head of Americas corporate private equity, said that his firm is advising its portfolio companies with limited tariff exposure — such as those in the technology, finance and health care sectors — to be bold. 

“We are asking them to lean in and be aggressive while others are retreating,” he said.

–With assistance from Fion Li and Meg Short.

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